Shumway to Return Client Cash in $8 Billion Fund by End of March

By Katherine Burton -
Feb 4, 2011

Chris Shumway, who announced he would
step down as chief investment officer of his $8 billion Shumway
Capital Partners LLC in November, said he’ll return client
capital by March 31, according to a letter sent to investors.

Shumway, 45, who started the Greenwich, Connecticut, firm
with $70 million in 2002 and has produced average annual returns
of 17 percent before fees, will continue to manage money for
himself and his employees.

Investors had asked to redeem $3 billion after Shumway told
them of his plan to step down. Last year, Shumway appointed Tom
Wilcox to be the sole portfolio manager, while saying he would
continue to oversee the hedge fund as chief executive officer
and chairman of the management committee. He named Wilcox and
three other employees as partners at the firm.

“We changed our operating structure and it created a
higher sense of risk for our investors and put greater
significance on short-term performance of the fund,” Shumway
said in an interview. “A key to my investment success has been
my ability to invest with a long-term focus,” which he said
he’ll be freer to do if he isn’t managing client capital.

Shumway, an alumnus of Julian Robertson’s Tiger Management
LLC, trades stocks worldwide. Shumway’s three funds returned
about 2 percent last year. Since inception, the funds’ average
annual performance beat the Standard & Poor’s 500 Index by 14
percentage points, before fees, according to the letter. The
funds returned 3 percent before fees from October 2007 to March
2009, when the S&P 500 fell about 57 percent, the firm said.

Shumway has 95 employees, including 25 investment
professionals. A number of Shumway’s alumni have opened funds in
recent years, and Shumway expects other employees to start their
own investment firms.

Shumway started investing when he was in Harvard Business
School, where he earned a master’s in business administration
after getting an undergraduate degree from the University of Virginia.

“It was really fun finding the gems and doing the
research,” including flying to visit corporate managements, he
said.

As chief investment officer, Wilcox would have been
responsible for day-to-day management of the portfolio, while
Shumway had planned to become a “super analyst” who would
focus on finding a few, highly profitable investment ideas each
year. He had also planned to manage risk and analyze
macroeconomic trends.

“That’s how I started in this business,” he said. “I’m
going back to that.”